Cash Transfers and Child Labor

Abstract

Cash transfer programs are widely used in settings where child labor is prevalent. Although many of these programs are explicitly implemented to improve children's welfare, in theory their impact on child labor is undetermined. This paper systematically reviews the empirical evidence on the impact of cash transfers, conditional and unconditional, on child labor. We find no evidence that cash transfer interventions increase child labor in practice. On the contrary, there is broad evidence that conditional and unconditional cash transfers lower both children's participation in child labor and their hours worked and that these transfers cushion the effect of economic shocks that may lead households to use child labor as a coping strategy. Boys experience particularly strong decreases in economic activities, whereas girls experience such decreases in household chores. Our findings underline the usefulness of cash transfers as a relatively safe policy instrument to improve child welfare but also point to knowledge gaps, for instance regarding the interplay between cash transfers and other interventions, that should be addressed in future evaluations to provide detailed policy advice.

Can cash transfers reduce child labor?

“…Within the set of conditional cash transfer programs considered in Figure 4, a one percentage point increase in school attendance is accompanied by only a 0.3 percentage point reduction in children's work [3]. This is not surprising, since school and work are not mutually exclusive (for example, children can work after school or during school holidays, or miss some classes for work).…”

“…They can affect child labor by modifying children's likelihood of attending school or by changing the returns to child labor [3]. First, cash transfers may change how households value children's use of time, encouraging them to send children to school and thus to work less or not at all.…”

“…First, cash transfers may change how households value children's use of time, encouraging them to send children to school and thus to work less or not at all. However, school attendance requires the commitment of a set amount of a child's time and also increases household spending on education [3]. Thus, deciding to send a child to school is likely to affect the household budget (more costs for school and less income from child labor).…”

Dilemmas in Rescue and Reintegration: A critical assessment of India’s policies for children trafficked for labour exploitation

“…The research suggests that cash transfers are most effective in impacting child labour when integrated with other investments in health, education facilities or afterschool education-part of a radical, sustained poverty-alleviation strategy. 38 Lump sum compensation does little to address the structural factors that lead households to use child labour as a coping strategy. 39 Finally, the acute mental and physical health needs of rescued children are acknowledged as an afterthought, without concrete policy initiatives to ensure delivery of suitable and sustained services.…”

Women’s economic capacity and children’s human capital accumulation

“…Finally, if the relative influence of 3 See, for instance, Benhassine et al (2012), Duflo (2003), and Edmonds (2006) for direct comparisons of the effects of providing cash grants to women versus men. See Baird et al (2014), Fiszbein and Schady (2009), Saavedra and Garcia (2012) for more general discussion of the effects of cash transfers on children's education and de Hoop and Rosati (2014), Edmonds (2008), and Fiszbein and Schady (2009) for more general discussion of their effects on children's work. 4 Rangel (2006), for instance, shows that investment in children's education increased when Brazilian women's bargaining power improved as a result of extended alimony rights.…”